Zynga was busy making news yesterday, and not just with a positive earnings call. Zynga announced the hiring of veteran gaming industry executive Clive Downie as the company’s new COO, which is another hiring coup following the acquisition of EA and Microsoft veteran Don Mattrick as CEO. Downie comes to Zynga after being a VP of marketing at EA, and most recently he just left his role as CEO of DeNA West to take the position at Zynga.
“I am pleased with our Q3 performance which exceeded our guidance both in terms of bookings and adjusted EBITDA. We are encouraged to see sightlines to growth and expect to be profitable for the full year on an adjusted EBITDA basis,” said Don Mattrick, Chief Executive Officer, Zynga. “Our teams are working hard to compete more aggressively on the web, move to mobile and develop new hits, and I am happy with the early progress we have made. We believe our top franchises, Zynga Poker, FarmVille and Words With Friends can be evergreen in terms of consumer interest and we are focused on growing these franchises in fiscal year 2014. I am confident that Zynga is rewiring itself in a meaningful way that will strengthen the core of our business and put us back on track to achieve significant long term growth and profits.”
Downie and Mattrick worked together at Electronic Arts, and Mattrick values Downie’s experience and knowledge, especially with mobile games and international markets. Those qualities will be valuable to Zynga as it strives to derive more and more of its revenue from mobile games.
Zynga’s earnings showed a slight loss of $68,000 for the quarter, far better than the loss last year of $53 million in the same quarter, or the loss of $16 million last quarter. Revenue came in at $203 million for the third quarter, a 36 percent decline over last year’s third quarter. The company is losing users, though – daily average users (DAU) were 30 million this quarter compared to 60 million in the same quarter last year.
Investors generally liked the news, boosting the company’s share price to $4 in after hours trading last night, a gain of over 13 percent. The stock is still up today, but only by about 8 percent at the time of this writing. Analyst Michael Pachter revised his long-term target for the stock upwards to $5 per share, as he believes the numbers show Zynga is likely to return to profitability sooner than expected.
We’ll have a more extensive analysis of Zynga’s situation and prospects, and what this means for the game industry in general, on Monday.